What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-08 · 123 added, 102 removed, 496 unchanged (31% of the section changed)

3 unchanged sentences

(In Thousands, Except Per Share Amounts)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Current assets:

38 unchanged sentences

200,000 shares authorized;

70,914 shares and 69,905 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

81,376 shares and 69,905 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 625,696 584,138

Accumulated other comprehensive loss ( 23 ) —

Accumulated other comprehensive income

Accumulated deficit ( 552,430 ) ( 497,530 )

5 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

22 unchanged sentences

(In Thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net loss $ ( 20,640 ) $ ( 34,908 ) $ ( 54,900 ) $ ( 69,048 )

Other comprehensive loss:

Unrealized loss on available-for-sale short-term investments, net of tax

( 7 ) — ( 23 ) —

Other comprehensive gain:

Unrealized gain on available-for-sale short-term investments, net of tax

Comprehensive loss $ ( 20,491 ) $ ( 34,908 ) $ ( 54,774 ) $ ( 69,048 )

4 unchanged sentences

Common Stock Additional

Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Three Months Ended June 30, 2024 Shares Amount

Balance as of April 1, 2024

Capital Accumulated Other Comprehensive Income (Loss)

Accumulated Deficit Total Stockholders' Equity

Three Months Ended September 30, 2024 Shares Amount

Balance as of July 1, 2024

70,914 $ 7 $ 593,253 $ ( 23 ) $ ( 531,790 ) $ 61,447

Issuance of common stock upon release of stock awards 22 — — — — —

Issuance of common stock under employee stock purchase plan 124 — 260 — — 260

Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 1,584

10,440 1 29,735 — — 29,736

Stock-based compensation — — 2,708 — — 2,708

Net Loss — — — — ( 20,640 ) ( 20,640 )

Other comprehensive loss — — — ( 7 ) — ( 7 )

Balance as of June 30, 2024

Other comprehensive gain

— — — 149 — 149

Balance as of September 30, 2024

81,376 $ 8 $ 625,696 $ 126 $ ( 552,430 ) $ 73,400

Common Stock Additional

Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Three Months Ended June 30, 2023 Shares Amount

Balance as of April 1, 2023

Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Three Months Ended September 30, 2023 Shares Amount

Balance as of July 1, 2023

69,804 $ 6 $ 579,555 $ — $ ( 455,430 ) $ 124,131

Issuance of common stock upon exercise of stock options 71 — 141 — — 141

Issuance of common stock upon release of stock awards 23 — — — — —

Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 331

2,752 — 6,781 — — 6,781

Stock-based compensation — — 2,283 — — 2,283

Net Loss — — — — ( 34,908 ) ( 34,908 )

Balance as of June 30, 2023

Balance as of September 30, 2023

69,827 $ 6 $ 581,838 $ — $ ( 490,338 ) $ 91,506

4 unchanged sentences

Common Stock Additional

Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Six Months Ended June 30, 2024 Shares Amount

Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Nine Months Ended September 30, 2024 Shares Amount

Balance as of January 1, 2024

4 unchanged sentences

Issuance of common stock under employee stock purchase plan 124 — 260 — — 260

Issuance of common stock in connection with an equity sales agreement, net of issuance costs of $ 1,584

10,440 1 29,735 — — 29,736

Stock-based compensation — — 10,561 — — 10,561

Net Loss — — — ( 54,900 ) ( 54,900 )

Other comprehensive loss — — — ( 23 ) — ( 23 )

Balance as of June 30, 2024

Other comprehensive gain

— — — 126 — 126

Balance as of September 30, 2024

81,376 $ 8 $ 625,696 $ 126 $ ( 552,430 ) $ 73,400

Common Stock Additional

Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Six Months Ended June 30, 2023 Shares Amount

Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Nine Months Ended September 30, 2023 Shares Amount

Balance as of January 1, 2023

7 unchanged sentences

Net Loss — — — — ( 69,048 ) ( 69,048 )

Balance as of June 30, 2023

Balance as of September 30, 2023

69,827 $ 6 $ 581,838 $ — $ ( 490,338 ) $ 91,506

3 unchanged sentences

(In Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities:

5 unchanged sentences

Asset impairment and other charges 165 9,984

Impairment of investment in non-marketable equity securities 3,910 3,875

Equity securities earned from research and development activities — ( 187 )

14 unchanged sentences

Proceeds from sale of property and equipment 84 27

Investment in short-term investments ( 57,140 ) —

Purchases of short-term investments

Proceeds from maturity of short-term investments 19,000 —

Proceeds from sale of short-term investments

Investment in non-marketable securities — ( 1,191 )

3 unchanged sentences

Proceeds from issuance of stock under employee stock purchase plan 525 —

Proceeds from issuance of common stock in connection with equity sales agreement

Proceeds from issuance of common stock in connection with equity sales agreements

Costs incurred in connection with equity sales agreements ( 1,615 ) ( 503 )

( 403 ) ( 395 )

Proceeds from long-term debt 29,521 —

10 unchanged sentences

Capital expenditures incurred but not yet paid $ 249 $ 159

Transfer from property and equipment to assets held for sale

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of June 30, 2024 and 2023 to the total of the same such amounts shown above in the unaudited condensed consolidated statements of cash flows:

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets as of September 30, 2024 and 2023 to the total of the same such amounts shown above in the unaudited condensed consolidated statements of cash flows:

September 30,

Cash and cash equivalents $ 37,452 $ 74,577

1 unchanged sentence

Total cash, cash equivalents and restricted cash $ 39,028 $ 76,630

This table excludes short-term investments of $ 54.6 million as of June 30, 2024.

Total cash, cash equivalents, and short-term investments as of June 30, 2024 were $ 73.2 million.

This table excludes short-term investments of $ 52.8 million as of September 30, 2024.

Total cash, cash equivalents, and short-term investments as of September 30, 2024 were $ 90.3 million.

See accompanying notes to the unaudited condensed consolidated financial statements.

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The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2023 Annual Report on Form 10-K and are updated below as necessary.

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023, are consistent with those discussed in Note 2 to the audited consolidated financial statements in the Company’s 2023 Annual Report on Form 10-K and are updated below as necessary.

There have been no significant changes in our significant accounting policies or critical accounting estimates since December 31, 2023.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of June 30, 2024 and results of operations for the interim periods presented.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly our financial position as of September 30, 2024 and results of operations for the interim periods presented.

The interim results are not necessarily indicative of the results for any future interim period or for the entire year.

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The assets are then no longer depreciated or amortized while classified as held for sale.

There were no assets classified as held for sale as of September 30, 2024 and December 31, 2023.

Accounting Pronouncements

Recently adopted accounting pronouncements

There were no recent accounting pronouncements or changes in accounting pronouncements during the three and six months ended June 30, 2024, that are of significance or potential significance to us.

There were no recent accounting pronouncements or changes in accounting pronouncements during the three and nine months ended September 30, 2024, that are of significance or potential significance to us.

Recently issued accounting pronouncements not yet adopted

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Disaggregated information is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

The following table presents balances of contract assets, unbilled receivables, contract costs, and contract liabilities (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Contract assets $ 3,424 $ 815

2 unchanged sentences

deferred revenue $ 10,621 $ 10,761

We had no asset impairment charges related to financial assets in the three and six months ended June 30, 2024 and 2023.

We had no asset impairment charges related to financial assets in the three and nine months ended September 30, 2024 and 2023.

The increase in contract assets was primarily due to increases in product revenue from contracts subject to over time revenue recognition.

1 unchanged sentence

The decrease in deferred revenue was primarily due to the timing of recognition of revenue.

As of June 30, 2024, we have $ 4.4 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 1.2 million of long-term unbilled receivables that is included within the other non-current assets line item in the condensed consolidated balance sheets.

As of September 30, 2024, we have $ 3.5 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 1.3 million of long-term unbilled receivables that is included within the other non-current assets line item in the condensed consolidated balance sheets.

As of December 31, 2023 , we had $ 9.1 million of short-term unbilled receivables presented as unbilled receivables within current assets and $ 0.8 million of long-term unbilled receivables that is included within the other non-current assets line item in the condensed consolidated balance sheets.

We recognized the following revenues (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Revenue recognized in the period for:

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The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting periods.

The estimated revenue does not include contracts with original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of June 30, 2024.

The balances in the table below a re partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts as of June 30, 2024 (in thousands):

Remainder of 2024

8 unchanged sentences

The following shares were not considered in the computation of diluted net loss per share because their effect was anti-dilutive (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

11 unchanged sentences

We adjust the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of interest and other expense, net in the unaudited condensed consolidated statements of operations.

There was no remeasurement event for our investments in MAI, seqWell, and other non-marketable equity securities that occurred during the three and six months ended June 30, 2024 and 2023.

We recognized no realized gains or losses during the three and six months ended June 30, 2024 and 2023.

For the three and nine months ended September 30, 2024, we recognized an impairment charge of $ 3.9 million which is presented within interest and other expense, net in the condensed consolidated statements of operations.

This adjustment is related to the write-down of our investment in MAI to its related fair value as determined based on valuation methods using the latest observed transaction price of MAI’s preferred stock securities to be issued during the fourth quarter of 2024 and adjusted for the rights and obligations of the preferred stock securities the Company holds.

There was no remeasurement event for our investments in seqWell and other non-marketable equity securities that occurred during the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2023, we recognized an impairment charge of $ 3.9 million and included this as an adjustment to the carrying value of our investments in seqWell and Arzeda Corp.

This adjustment, which is presented within interest and other expense, net in the condensed consolidated statements of operations, is related to the write-down of the carrying value of our investments in seqWell by $ 3.0 million and in Arzeda by $ 0.9 million to their estimated fair values as determined based on valuation methods using the recent transaction price of similar p referred stock securities issued by the investees and adjusted for the rights and obligations of the preferred stock securities the Company holds.

We recognized no realized gains or losses during the three and nine months ended September 30, 2024 and 2023.

The following table presents the carrying value of our non-marketable equity securities (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

$ 2,783 $ 6,693

3 unchanged sentences

Fair Value Measurements

The following tables show the Company’s cash, cash equivalents, and short-term investments by significant investment category as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

The following tables show the Company’s cash, cash equivalents, and short-term investments by significant investment category as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Short-term Investments

5 unchanged sentences

Corporate debt 8,723 14 ( 2 ) 8,735 — 8,735

agency securities 1,983 9 — 1,992 — 1,992

treasury securities 33,555 98 — 33,653 — 33,653

9 unchanged sentences

We limit the credit risk associated with our cash equivalents and short-term investments by placing them with banks and institutions we believe are highly credit-worthy and investing in highly-rated investments.

As of June 30, 2024, and December 31, 2023, the contractual maturity of all investments held was less than one year.

During the three and six months ended June 30, 2024 and 2023, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on our short-term investments.

As of September 30, 2024, and December 31, 2023, the contractual maturity of all investments held was less than one year.

During the three and nine months ended September 30, 2024 and 2023, we did no t recognize any significant credit losses no r other-than-temporary impairment losses on our short-term investments.

Balance Sheets Details

Inventories consisted of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials $ — $ 108

3 unchanged sentences

Prepaid expenses and other current assets

As of June 30, 2024, prepaid expenses and other current assets consisted of prepaid expenses of $ 2.1 million, assets held for sale of $ 0.1 million, and other current assets of $ 0.9 million.

As of September 30, 2024, prepaid expenses and other current assets consisted of prepaid expenses of $ 3.2 million and other current assets of $ 0.3 million.

As of December 31, 2023, prepaid expenses and other current assets consisted of prepaid expenses of $ 4.6 million and other current assets of $ 0.6 million.

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Laboratory equipment $ 36,468 $ 37,216

6 unchanged sentences

Property and equipment, net $ 13,266 $ 15,487

$ 13,966 $ 15,487

Depreciation expense included in both research and development expenses and selling, general and administrative expenses in the unaudited condensed consolidated statements of operations was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

Other accrued liabilities consisted of the following (in thousands):

June 30, 2024 December 31, 2023

Accrued professional and outside service fees $ 2,766 $ 2,330

September 30, 2024 December 31, 2023

Accrued purchases $ 3,291 $ 1,402

Accrued professional and outside service fees 2,810 2,330

Other 404 1,003

1 unchanged sentence

Stock-based Compensation

Equity Incentive Plans

In August 2024, our board of directors (the “Board”) approved the 2024 Employment Inducement Award Plan (the “2024 Inducement Plan”) which provides for the grant of non-qualified stock options, RSAs, restricted stock units (“RSUs”), and performance awards to eligible employees with respect to an aggregate of up to 1,000,000 shares of our common stock.

Employee Stock Purchase Plan

In April 2023, the Board approved an employee stock purchase plan (the “ESPP”) which became effective upon approval at the Annual Meeting in June 2023.

In April 2023, the Board approved an employee stock purchase plan (as may be amended from time to time, the “ESPP”) which became effective upon approval at the Annual Meeting in June 2023.

The ESPP allows eligible employees of the Company to purchase shares of our common stock through payroll deductions.

4 unchanged sentences

The first offering period of the ESPP commenced in December 2023.

For the three and six months ended June 30, 2024, 123,889 shares of common stock were purchased under the ESPP.

As of June 30, 2024, 1,876,111 shares of common stock were available for future issuance under the ESPP.

We recognized $ 72 thousand and $ 149 thousand of stock-based compensation expenses related to the ESPP for the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, the total unrecognized stock-based compensation expense, net of expected forfeitures, related to the ESPP was $ 0.6 million and is expected to be recognized over the remaining offering period.

For the three and nine months ended September 30, 2024, nil and 123,889 shares of our common stock were purchased under the ESPP, respectively.

As of September 30, 2024, 1,876,111 shares of common stock were available for future issuance under the ESPP.

We recognized $ 0.1 million and $ 0.2 million of stock-based compensation expenses related to the ESPP for the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024, the total unrecognized stock-based compensation expense, net of expected forfeitures, related to the ESPP was $ 0.6 million and is expected to be recognized over the remaining offering period.

Stock Options

6 unchanged sentences

Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

The following table presents total stock-based compensation expense by security type included in the unaudited condensed consolidated statements of operations (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Stock options $ 1,506 $ 1,017 $ 5,137 $ 3,035

RSUs and restricted stock awards (“RSAs”)

1,152 1,373 2,469 2,499

RSUs and RSAs 1,109 942 3,578 3,441

Performance-contingent restricted stock units (“PSUs”) — 292 247 1,408

— 279 247 1,116

Performance based options (“PBOs”) — 32 1,357 ( 76 )

1,341 ( 32 ) 1,357 ( 108 )

ESPP 93 — 242 —

2 unchanged sentences

Pursuant to the advisory agreement, the exercise period for the former executive’s vested stock options and performance-based options was also extended.

The modification resulted in a stock-based compensation expense of $ 2.0 million recognized in selling, general and administrative expenses for the three and six months ended June 30, 2024.

As of June 30, 2024, unrecognized stock-based compensation expense, net of expected forfeitures, was $ 12.0 million related to unvested stock options, and $ 6.0 million related to unvested RSUs and RSAs.

The modification resulted in a stock-based compensation expense of $ 2.0 million recognized in selling, general and administrative expenses during the nine months ended September 30, 2024.

As of September 30, 2024, unrecognized stock-based compensation expense, net of expected forfeitures, was $ 12.0 million related to unvested stock options, and $ 5.0 million related to unvested RSUs and RSAs.

Stock-based compensation expense for these awards will be recognized through 2028.

1 unchanged sentence

Exercise of Options

For the six months ended June 30, 2024 and June 30, 2023, we issued 75,856 and 214,284 shares, respectively, upon option exercises at a weighted-average exercise price of $ 1.97 per share, with net cash proceeds of $ 0.1 million and $ 0.4 million, respectively.

For the nine months ended September 30, 2024 and September 30, 2023, we issued 72,856 and 214,284 shares, respectively, upon option exercises at a weighted-average exercise price of $ 1.97 per share, with net cash proceeds of $ 0.1 million and $ 0.4 million, respectively.

Sales Agreements

In May 2021, we filed a Registration Statement on Form S-3 with the SEC (the “2021 Registration Statement”), that automatically became effective upon its filing, under which we may sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

In May 2021, we filed a Registration Statement on Form S-3 with the SEC (the “2021 Registration Statement”), that automatically became effective upon its filing, under which we were permitted to sell common stock, preferred stock, debt securities, warrants, purchase contracts, and units from time to time in one or more offerings.

On February 27, 2023, we filed a post-effective amendment to the 2021 Registration Statement.

Pursuant to that post-effective amendment, we registered an aggregate $ 200.0 million of securities.

In May 2021, we entered into an Equity Distribution Agreement (“EDA”) with Piper Sandler & Co (“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the EDA up to a maximum of $ 50.0 million of shares of our common stock.

Under the terms of the EDA, PSC may sell the shares at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).

We are not required to sell any shares at any time during the term of the EDA.

The EDA will terminate upon the earlier of:

(i) the issuance and sale of all shares through PSC on the terms and conditions of the EDA, or (ii) the termination of the EDA in accordance with its terms.

Either party may terminate the EDA at any time upon written notification to the other party in accordance with the EDA, and upon such notification, the offering will terminate.

Under no circumstances shall any shares be sold pursuant to the EDA after the date which is three years after the registration statement is first declared effective by the SEC.

We agreed to pay PSC a commission of 3 % of the gross sales price of any shares sold pursuant to the EDA.

With the exception of certain expenses, we will pay PSC up to 8 % of the gross sales price of the shares sold pursuant to the EDA for a combined amount of commission and reimbursement of PSC's expenses and fees.

No shares of our common stock were issued and sold pursuant to the EDA during the three and six months ended June 30, 2024.

During the three and six months ended June 30, 2023, 2,751,941 and 3,079,421 shares of our common stock, respectively, were issued and sold pursuant to the EDA and we received gross proceeds of $ 7.1 million and $ 8.7 million, or $ 6.8 million and $ 7.9 million in net proceeds after PSC's commissions and direct offering expenses of $ 0.3 million and $ 0.7 million, respectively.

In May 2021, we entered into an Equity Distribution Agreement (“EDA”) with Piper Sandler & Co (“PSC”), under which PSC, as our exclusive agent, at our discretion and at such times that we determined from time to time, may have sold over a three-year period from the execution of the EDA up to a maximum of $ 50.0 million of shares of our common stock.

Under the terms of the EDA, PSC was permitted to sell the shares at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).

We were not required to sell any shares at any time during the term of the EDA.

On April 24, 2024, we terminated the EDA.

No shares of our common stock were issued and sold pursuant to the EDA during the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, nil and 3,079,421 shares of our common stock, respectively, were issued and sold pursuant to the EDA and we received gross proceeds of nil and $ 8.7 million, or nil and $ 7.9 million in net proceeds after PSC's commissions and direct offering expenses of nil and $ 0.7 million, respectively.

On May 2, 2024, we entered into a Controlled Equity Offering℠ Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), under which Cantor, at our discretion and at such times that we may determine from time to time, may sell up to a maximum of $ 75.0 million of shares of our common stock.

2 unchanged sentences

We will pay a commission of up to 3.0 % of gross sales proceeds of any common stock sold under the Cantor Sales Agreement.

We have made no sales under the Cantor Sales Agreement and as of June 30, 2024, $ 75.0 million of shares remained available for sale under the Cantor Sales Agreement.

During the three and nine months ended September 30, 2024, 10,440,000 shares of our common stock were issued and sold pursuant to the Cantor Sales Agreement and we received gross proceeds of $ 31.3 million , or $ 29.7 million in net proceeds after Cantor’s commissions and direct offering expenses of $ 1.6 million .

As of September 30, 2024, $ 43.7 million remained available for sale under the Cantor Sales Agreement.

Commitments and Contingencies

2 unchanged sentences

Lease cost amounts included in the measurement of lease obligations and other information related to non-cancellable operating leases were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Weighted-average discount rate 6.6 %

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid (in thousands):

Operating cash flows from operating leases $ 3,542 $ 5,668

As of June 30, 2024, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

As of September 30, 2024, our maturity analysis of annual undiscounted cash flows of the non-cancellable operating leases are as follows (in thousands):

Years Ending December 31, Operating Leases

8 unchanged sentences

Total operating lease liabilities $ 13,215

In July 2023, we announced our plan to consolidate operations from our previous San Carlos facility to our headquarters in Redwood City.

On September 1, 2023, the Company entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Vaxcyte, Inc.

(“Vaxcyte”) to assign to Vaxcyte all of the Company’s right, title and interest in, under and to the San Carlos facility and the Lease Agreement, dated as of January 29, 2021.

On September 6, 2023, the Company, Vaxcyte and ARE-San Francisco No.

63, LLC (“ARE”) entered into a Consent to Assignment and First Amendment pursuant to which ARE consented to the Assignment Agreement and the assignment by the Company and the assumption by Vaxcyte of the Company’s interest as tenant in the lease.

The effective date of the assignment was October 1, 2023.

As a result of the Assignment Agreement, the Company remeasured the lease obligation for the San Carlos facility to its present value of $ 3.1 million and wrote off the remaining lease liability of $ 19.6 million and the corresponding right of use asset balance.

Simultaneously, the Company determined that indicators of impairment existed because the lease assignment impacts the utilization of the related right of use assets and leasehold improvements in the San Carlos facility, and therefore performed a recoverability test by estimating future undiscounted net cash flows expected to be generated from the use of these assets.

As there were no substantial future cash inflows associated with these assets, the carrying values of these assets were deemed unrecoverable.

As a result, during the third quarter of 2023, the Company recognized a non-cash impairment charge of $ 7.7 million, of which $ 4.7 million was related to leasehold improvements and $ 3.0 million for the right of use assets, presented within the asset impairment and other charges line item in the condensed consolidated statements of operations, for the three and nine months ended September 30, 2023.

As part of the plan, the Company entered into agreements to sell certain laboratory equipment previously located in the San Carlos facility through an asset auction and as part of the lease assignment of the San Carlos facility to Vaxcyte.

These certain items of laboratory equipment met the assets held for sale criteria and were sold during the fourth quarter of 2023.

Using a fair value estimate based of Level 3 inputs in the fair value hierarchy, the Company determined that the carrying value of these assets exceeds fair value less costs to sell, which resulted in a write-down of $ 1.5 million, presented within the asset impairment and other charges line item in the consolidated statements of operations for the three and nine months ended September 30, 2023.

Other Commitments

14 unchanged sentences

Gain contingencies are not recorded until they are realized.

We are not currently a party to any material pending litigation or other material legal proceedings that management believes could have a material adverse effect on our financial statements.

Indemnifications

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The Company is also required to pay an exit fee upon any payment or prepayment equal to 3.0 % of the aggregate principal amount of the tranches funded under the Innovatus Loan.

The Innovatus Loan contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and net product revenue, with the latter beginning with the period ending September 30, 2024.

The Company believes it is in compliance with the terms included within the Innovatus Loan as of June 30, 2024 .

The Innovatus Loan is secured by perfected first priority liens on the Company's assets, including a commitment by the Company to not allow any liens to be placed upon the Company's intellectual property.

1 unchanged sentence

The discount and issuance costs will be amortized over the life of the Innovatus Loan.

Interest expense for the Innovatus Loan for the three and six months ended June 30, 2024 was $ 1.0 million and $ 1.5 million respectively, and is inclusive of non-cash amortization of the debt discount, debt issuance costs, payable in-kind interest, and accretion of final payment.

The carrying amount of the Innovatus Loan approximates fair value given its recent issuance and the interest rate is based on the prime rate.

The effective interest rate for the Innovatus Loan was 14.0 % as of June 30, 2024 .

Interest expense for the Innovatus Loan for the three and nine months ended September 30, 2024 was $ 1.0 million and $ 2.5 million respectively, and is inclusive of non-cash amortization of the debt discount, debt issuance costs, payable in-kind interest, and accretion of final payment.

The carrying amount of the Innovatus Loan approximates fair value given its recent issuance and the interest rate is based on the current prime rate.

The effective interest rate for the Innovatus Loan was 13.5 % as of September 30, 2024 .

Additionally, in connection with entering into the Innovatus Loan, we entered into a Warrant Agreement with Innovatus on February 13, 2024 and issued to Innovatus a warrant to purchase an aggregate of 424,028 shares of the Company’s common stock at an exercise price of $ 2.83 per share.

3 unchanged sentences

The Company accounts for the amortization of the debt discount and issuance costs utilizing the effective interest method.

Long-term debt consisted of the following at June 30, 2024 (in thousands):

June 30, 2024

Long-term debt consisted of the following at September 30, 2024 (in thousands):

September 30, 2024

Face value of debt $ 30,000

23 unchanged sentences

Com parative prior period disclosures that reflected the previous two segments' information have been revised to conform to this change in our reportable segment.

As a result of the restructuring of our business, the Company determined that a triggering event had occurred that required an interim goodwill impairment test during the third quarter of 2023.

The fair value estimate used in the interim goodwill impairment test was primarily based on Level 3 inputs in the fair value hierarchy.

Based on the results of the impairment evaluation, the Company determined that the goodwill within the Novel Biotherapeutics reporting unit was impaired, which resulted in a non-cash impairment charge of $ 0.8 million to write off all of the associated goodwill.

The impairment charge is recorded within asset impairment and other charges in the condensed consolidated statements of operation for the three and nine months ended September 30, 2023 .

Significant Customers

1 unchanged sentence

Percentage of Total Revenues for the

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

Percentage of Accounts Receivables as of

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

* Percentage was less than 10%

Identifiable long-lived assets by location was as follows (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

United States $ 24,277 $ 28,624

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements